My 77 f150 I just purchased has a NP203 t-case w/part time
kit installed. I am not exactly sure about the operation of the
shift pattern. For example is 4wd engaged when in the lock
positions. Thats what I am guessing.

 

Yes, you are correct there. If you have the hubs locked, you can put in in lock mode on the fly as the front drive shaft will be spinning already.